Building channel focus

SAP is changing focus to develop a channel outside of its traditional large enterprise base

Tags: SAP
  • E-Mail
Building channel focus Eric Duffaut, (L) SAP’s President of Global Ecosystem & Channels and Mazen Jabri, head of Channels and Ecosystem for MENA region.
By  Mark Sutton Published  July 20, 2011

As SAP broadens its product portfolio and expands into the SME space, it has also had to learn how to build a channel to reach a customer base outside of the traditional large enterprises that it built its software empire on. Channel ME speaks to Eric Duffaut, SAP’s President of Global Ecosystem & Channels and newly-appointed head of Channels and Ecosystem for MENA region, Mazen Jabri, on how its new partner programmes have progressed.

SAP has been looking to reposition itself in channel terms, can you explain why?

ED: When I joined SAP six years ago, SAP was known for being a company that built complex solutions for solving complex problems in large companies. The question was ‘how do we go after small to mid-sized enterprises?’ I was recruited to think about how we could address this market segment. I designed the go-to-market for the SME, and in January, we went through a complete restructuring of our global customer operation. I now run eco-system and channels, that includes all types of partners, from large systems integrators, technology partners, software partners, VARs, and also alternative routes to market like our own Inside Sales force, and our web channel.

We have chosen to be an open innovator at SAP, innovation is back at SAP big time, we really want to be the best at what we do. We want also to be the best at partnering. We have three imperatives, for our vision to be, by the middle of the decade, a 20 billion euro company; to expand our margin to 35% and to touch one billion people with our software.

We have three imperatives that are critical to achieve these goals, that are very much linked to what we are doing in eco-systems and channels. The first is co-innovation. There are many things that we cannot do by ourselves. We have many partners that are planning to co-innovate with us.

Secondly, if you want to reach one billion users, you need to expand your route to market. We want to go deep in the SME market, and we are aiming to have 100% of this business driven by partners. We have been pretty successful, 65,000 of our customers are served through partners, and we want to expand that even further. The prime route to market in the SME sector will be partners.

We also want partners in the large enterprise segment that do things we don’t do well. If you look at a region like SAP MENA, we have 270 people, that is better than we ever had, but we need partners to be an extension of our service and sales force, where we don’t have the capacity or the capability to position. You will see partners becoming more and more important as a sales play in the large enterprise segment.

The final one, is how do we expand our service capacity, especially in a market like MENA which is an expanding market. If you want to sustain this software growth, and to achieve the margin expansion, you need to rely on a strong ecosystem as a force multiplier, as a service arm.

Many partners in the past used to complain that we compete on the service side, we are going to shrink this overlap, focus our service people on being market makers and enabling partners, and having partners as our prime source of service. Those are the three imperatives, they are pretty big, which is why partnering is becoming a core competency at SAP.

Do you think the channel’s perception of SAP has shifted?

ED: On a global perspective, the answer is yes, big time. If you go to events like SAPPHIRE partners are very excited, they understand that they are key to us, and hence we will focus on making them better; and they are excited by the business opportunities, they are excited by the innovation that is going on at SAP, that represents huge opportunities for them.

Partners are excited that our way of engaging with them is more predictable than ever before. When we tell a SME VAR we want this business to be 100% indirect, we are super clear. Predictability is everything.

MJ: In MENA, we have a cleaner platform than the rest of the world, we only really started expanding in mid-2009. We realize how important this region is for the growth of our business worldwide, and how much it needs investment across the board.
We decided to adopt the new model, which is unifying all functions under one team, and driving the partner community to capitalize on the advantages. We are segmenting our customer base; we have the named accounts where we focus directly, that doesn’t mean we sell directly to them, but we have a direct relationship; and then the volume segment, which is driven 100% by partners. We will not sell direct in that area.
Because most of the economic growth in MENA is public sector driven, the only way SAP is going to be able to engage at all levels of the public sector is through partners, to go to the established partners, who have the experience and credibility, and make them SAP partners. We have recruited more than 20 partners in the past five months, in that segment by itself, to increase our ability to do business with the public sector.

What is the split between named and volume accounts?

MJ: There are the traditional key accounts, the top 10 or 15, then there is the enterprise accounts, which are roughly 2,000, and there are the volume accounts, which today we have 8,000-10,000. We are going through a huge exercise of profiling customers, making sure we have the right proposition for them. In terms of share of revenue, 50% is still from key accounts, and the rest is roughly 20-25% in volume and 20-25% in large accounts.

Inside Sales is new here, what is its role and how does it fit with the partners?

ED: We started Inside Sales at SAP in 2006, starting with SME, with one goal – support and enable the partner to grow their business with SAP. The role of Inside Sales is to do demand generation, to cover the market. It is all about coverage in the SME, and the most effective way of doing it is with our partners and Inside Sales.

MJ: Most of the Inside Sales that we have started to engage here in MENA are on the volume segment, some of them are on the large enterprise segment. Last year we had three Inside Sales staff, this year we have twelve, so in a few months we have quadrupled the number of Inside Sales.

How are leads generated by Inside Sales distributed to partners?

MJ: In MENA, we have adopted a country model, so each country has its own focused Inside Sales execs, initially horizontally on all products, but as we build up the sales force we will specialise them.

They talk to the partners that are covering that country. Every Inside Sales exec knows the set of partners they are working with, and we approach them by their specialisation. If it’s a chemical initiative, we go to the chemical industry certified partner, if it’s a wholesale initiative it is a wholesale certified partner. We are encouraging partners to specialise, in order not to compete over the baseline, and this way they have more potential to grow profitably.

Is there room to specialize within one country in small markets like the GCC?

MJ: In MENA although we are running a country-based model, we still sign one contract for all of the region. As soon as you become a value-added reseller of SAP, you are able to operate in all countries in MENA, in your country of choice, or complementary countries if you demonstrate ability and presence. We also encourage partners to work together, with the Extended Business Programme, to have a fronting partner in one country, and a supporting partner that combine forces in order to address requirements.

How are you making it easier for partners to onboard and skill up?

ED: We have split our partners into three: influencing partners who work at the advisory level, like Ernst & Young; large system integrators, like IBM, Accenture and the traditional value-added resellers, which we are empowering with this PartnerEdge programme.  We are putting all the products in the same programme, so they have access to all the products, with the right specialisation, through one contract. We are not limiting partners to any segment, we are offering freedom of choice for customers and partners alike.

Isn’t there a risk that will create conflict between partners?

MJ: No, it will be the other way around. In MENA, a lot of the smaller partners are established and have the relationship with the customer but don’t have the capability from an SAP service point of view to deliver. In many cases, they front the opportunities and bring the big systems integrators to work with them. We have seen three of those engagements in Q1. It is encouraging them to complement each other, rather than compete.

ED: On the enablement side, we have dedicated programmes on sales and implementation, we are getting more structured in the way we wrap up and enable partners. There are a lot of partners that are making a huge investment on resources, so we have to have a more programmatic way of enabling partners than ever before.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code